Lebanese militants, Hezbollah, have fired a barrage of anti-tank missiles at an army base, scoring a number of direct hits, according to the Israeli military.
Israel responded with heavy artillery fire toward targets in southern Lebanon.
The sudden burst of violence raised the prospect of a wider round of fighting between Israel and the Lebanese militant group Hezbollah.
The bitter enemies, who fought a month-long war in 2006 that ended in a stalemate, have appeared to be on a collision course in recent weeks amid a series of covert and overt Israeli military strikes and Hezbollah vows of revenge.
Lebanese Prime Minister Saad Hariri held telephone calls with US Secretary of State Mike Pompeo as well as an adviser to French President Emmanuel Macron, urging Washington and Paris as well as the international community to intervene in the volatile situation.
Israel considers Iran to be its greatest enemy and Iran-backed Hezbollah to be its most immediate military threat.
Hezbollah has an experienced army that has been fighting alongside the forces of Syrian President Bashar Assad in Syria’s civil war and it is believed to possess an arsenal of some 130,000 missiles and rockets.
Throughout the Syrian war, Israel has acknowledged carrying out scores of air strikes aimed at preventing alleged Iranian arms transfers to Hezbollah.
In recent weeks, Israel is believed to have struck Iranian or Hezbollah targets in Iraq and Lebanon as well.
Hezbollah has vowed to avenge the deaths of a pair of operatives it says were killed in an Israeli strike in Syria last week.
Hezbollah has denied it is pursuing a domestic missile-production programme.
"The Islamic Resistance carried out the secretary general’s promise to retaliate for the two aggressions," Hezbollah’s Al-Manar TV said on Sunday, referring to the Israeli air strike in Syria and drone strike in Beirut.
In a speech on Sunday, Israeli Prime Minister Benjamin Netanyahu accused Iran of fomenting the violence.
"A new empire has arisen, the goal of which is to defeat us," he said.
"They dispatch proxies. We are dealing with extremist Islam led by various elements but in the end, the biggest threat to our existence comes from Iran."
It is unclear if there are any casualties.